Tax Loss Harvesting - The Juice Worth the Squeeze


On today's episode, Financial expert and Amazon best-selling author John Browning talks about how a down market can actually be a good thing. Tax Loss Harvesting can help you lower your tax bill. This is the "Juice Worth the Squeeze" at times. At other times, it can leave a sour taste in your mouth. There are three other considerations that need to be taken into account for this to benefit you. Learn more when you Connect with John by texting "LIFE" to 21000 or

Welcome to the build your life podcast with John Browning. Build your life as a relaxed and unedited conversation with financial expert and number one Amazon bestselling author, John Browning. John is the founder of Guardian Rock Wealth and serves clients across the United States. John's the author of the book build a life, not a portfolio, a guide to your financial future based on your personal values, which you can purchase on Amazon, or stay around to the end of today's show and I'll tell you how to get a free copymailed right to your door. I'm Michael Delon, your host for the next few minutes as we chat with financial expert and business owner John Browning. John Browning, how is your day going today, sir, fantastic. Couldn't hardly be love it, love it, love it, and I'm looking forward to talking with you. We're talking harvesting Um. It's funny because I'm my wife brought home some lines from...

...the story the other day and I drink carbonated water, and so I cut a linement half and squeeze that juice into my carbonated water just to give us some flavor, and it was really good. And we're talking about a different kind of juice worth squeezing today. And you term this as um tax loss harvesting, and I will be in the majority of your audience, I'm sure, to go. I don't have a clue what you're talking about, John. So do tell what is tax loss harvesting and why does it matter? All right, so, if you have a taxable account, so in other words, and not an IRA and not a floral one, k. So something that you when you make a trade, to you spy and sell the security or, if you're getting income from that account, Fay taxes on it. Okay, okay. So, if it's that type of account, what is really popular this year in particular, and the one silver ten something lining...

...for a downward sloping market which we have seen for a while now, is that you can actually select a particular security sell it at a loss, if if you've held it for a year or more. Okay, and then that creates what we call a tax loss, which you can harvest at tax time and count that against your income for the year. Okay, so would in effect lowering your taxable income. Is that what it does? That's exactly what you're lowering your tax bill. Exactly. Interesting, then it's popular to do towards the end of the year. Almost every year, you know, we will look, uh, typically or financial advisor or someone will look at your count say is there anything that is declined in value? It's over, you've held it for over a year. You could lower your tax bill. Huh.

It's called tax loss harvesting. Tax loss harvesting, that's an I'm just trying to get my head around that whole phrase, because you're harvesting the tax laws because you lost money on something. But it actually can be a good thing in certain situations. is what it sounds like. It's okay to lose some money because it's going to lower your tax bill, so it might kind of equal it out. Help me out. So this is the tricky part and this is where you get into is the juice worth the squeeze? Right, and is becuse? Have you ever like, you know, you squeeze the Leving, you squeeze the line. You know, like that's really hard to do and I just got that little tiny bit of juice was not really worth it, right. Yeah, you kind of feel that way. Well, sometimes when you're looking so hard to find a tax loss, once you figure in your trade costs, your opportunity costs, so of actually doing the trade and by your taxable income is likely to be in the next year.

You know, is it really worth spending all that time and going through all of that rigamarole just to find a loss to harvest? So that's that's like number one thing to consider when you're talking about tax loss harvesting. It can be a very powerful tool, though, it can be, but, but, but it could also, believe, a very sour taste in your mouth from hear. But that's that's why, John, just why people need to talk to you and work with people like you, because before today I don't even think I've ever heard of that concept, not not that way anyway. Right. And and most people probably just get to the end of the end. They're like, I lost money there and there and there, and they don't think about pity pitying that against their gains and say, you know what, but if we take that and we move it over here in this scenario, it can actually be beneficial to you who think about stuff like that,...

John Browning does. We always saying we'll keeps you up at night. This is what keeps John up at night thinking about things like this. That's right, that's right. But but you do it so that you can serve your clients, and that's the cool thing about you. You know, you've got so much knowledge in your nogging that you just do these things and most people, the average consumer, just doesn't do it. The average person building and wealth, building a portfolio, we don't think in these terms. And you have a unique ability to to talk with your clients, understand their life, their situation, their desires, their goals and, on an individual basis, give them financial advice and counseling. We don't do that here on this podcast, right. We don't give financial advice or anything, but we talk about concepts and say this may apply to you. And Wow, we're recording this in like the middle of the year. This might be a good time to start talking to John so that as you come to the end of the year and tax planning, you might be able to harvest tax losses and pay less... Uncle Sam possibly. And there's there's actually there's a couple. There's three more things to consider when you're when you're thinking about tax loss harvesting and and of course the first one is is the juice worth of squeeze? But have you ever had squeeze like a tomato? Yeah, we get some on your shirt. Yeah, and then you gotta wash it out right. Well, you gotta be careful when you're tax loss harvesting because there are rules surrounding that and you don't want to get washed out. That's what the I R S calls it. When you sell a security, maybe you still like the security, but you sold it so that you could take the tax loss and then you buy it back into your portfolio before thirty days. All that a wash sale and they will deny your tax loss. So that's the second thing you gotta Watch for, is don't get washed out. Okay, the other thing... I find this all the time. Went to oh well, they get so excited, all the markets down, but that's okay, I get to take some tax losses. So it's a little counterintuitive. It's really easy to get lost and it's no fun to be lost right. But what happens is because you're selling some of those securities that that you actually like, that fit into your plan, your long term plan, you're also worried about getting washed out, so you don't want to buy them back right away because then you get denied on your tax loss. But is their style drift? Are you getting off course? And you know they have told me. I have never actually measured it, but if you're off by one degree and you walk five FT, you'RE gonna be off to the mark by roughly a little less than an inch. Now, if you fly around the world and you're off by one degree, you're gonna be off by about four hundred miles. So if... get off track just a little bit in your financial flame, it's much it can be much the same problem by the end of things when you're in retirement. If you haven't readjusted things back and gotten back on track to your plan, then you could get lost. So being careful that this idea of being able to lower your tax bill doesn't take over the whole plan is super important. And then the final thing that I always like to say is if you snooze, you could lose. So if you're just that, you only look at your portfolio at your end, you could be losing out on tax lost harvesting that could have happened during the year. HOW TO LOSE ON A loss? Lose on a lost position. Right. So those are the those are the four things that I like to talk about when I talk about tax loss harvesting. It's a powerful tool and with all powerful tools, you have to be careful that you use them correctly. Wow, UM, wow.

That's incredible. But I've never really thought about that because, yeah, most people do it that at the end of the year, but what if your loss happens in November or October? You can take your loss there, but if you miss out on that, if you lose that loss and your stock comes back up, then you've lost the harvesting. That's interesting, Um. And then making sure you don't get off course in that. You said the style drift. We're gonna do an entire episode on that. That's a that's a great concept to say. You build a portfolio to sustain your life. If part of that portfolio goes south, let's say, well, you can sell it off and do text loss harsting, but then you need to replenish that somewhere down the line with a different something or other to get your portfolio back where it needs to be for your long term goals, whatever those are. That's what you talk to clients about, as you understand their situation uniquely. That's fascinating, Um, so much to this financial advising world that you are a part of. John, let me, uh, let me encourage...

...people to reach out and talk to you and get some clarity and some understanding, because obviously, if you know this much about tax loss harvesting, you know a lot about lots of other things that can help your clients, and I know that's what you love to do, is just have conversations, get to know them, figure out what they're trying to make happen. How do you help them build a portfolio that will sustain their life and let them enjoy life now and in the future? That's what you do at Guardian Rockwell, so reach out to John Browning, Guardian Rock Wealth Dot Com, pick up your your phone, your smartphone, and text the word life to twenty one thousand. You'll get some information from him as well, and just have a conversation. Um, he's a great guy, very laid back but super, super knowledgeable on how you might be able to harvest some tax losses and squeeze that juice so that it's beneficial to you anyway. John Browning, thanks for another great episode. We will look, uh, talk next time about some diet control and poor some control and stuff. I know I've been trying to...

...lose weight and uh, I want to see how that applies to my financial planning. Okay, all right, sounds good. Money really is a big part of our lives and John Browning can help you and your family learn how to keep money in the proper perspective. It's important, but it's only a tool that can help you build the life that you want. If you like, John Amelie a free copy of his book build a life, not a portfolio. Go to John's website, Guardian Rock Wealth Dot com, and click the contact to US link and send your request. John Will Mell a copy of his book right to your door absolutely free. Thanks for listening to building your life podcast with John Browning. Be Sure to subscribe to this podcast so each new episode will be sent to you automatically when it's released. Have a terrific day. Nothing in this podcast should be construed as personal investment advice and past performances no and tee of future results. Investing is not appropriate for everyone.

There is a risk of loss associated with investing in the markets. No representation or implication is being made that using any methodology or system will generate profits or insure freedom from losses. Please remember that investing carries risk. Guardian Rock Wealth LLC and its affiliates are fiduciary investment advisors. Please consult with US or another experienced, qualified investment advisor before making any investment decisions and or trying to implement any of the strategies and tactics we may discuss in any of our publications or podcasts.

In-Stream Audio Search


Search across all episodes within this podcast

Episodes (144)